US Employment Numbers Disappoint Boosting Pound To Month High
OANDA | Oct 23, 2013 01:03AM ET
The United States shutdown forced the delay in the release of the non-farm payroll report on the first friday of the month. Today the figures were released and they were mixed. The jobs added to the US economy disappointed as they came well below expectations at 148,000. The forecast was around 180,000 new jobs. On the positive side the overall unemployment declined from 7.3% to 7.2% but that has more to do with participation rate that continues to be the lowest in over 30 years at 63.2%.
The GBP has appreciated strongly in the past two weeks. Given the political issues in the US flow have exited the country and demand for the Pound has risen. Good economic indicators in the UK have boosted the currency versus the US Dollar. Gross Domestic Product growth was 0.8% and the IMF upgraded its forecast even as it gloomily downgraded global forecasts. The UK recovery is moving at a moderate pace, but given the speed of recovery around the world, only the Asian economies are showing a higher speed.
September’s weak NFP figure puts in question the likelihood of the US Federal Reserve starting their tapering program in October. Reducing the amount of bonds the central banks buys is the turning point for global rates at an all time low. The plan was for the Fed to start this year with a forecasts rate increase in mid 2014. Given how the US political and fiscal debates have hurt its credibility and potential credit rating the demand for the Dollar has suffered and the major currencies have taken advantage.
Earlier today the UK posted a smaller forecasted budget deficit in September. UK Chancellor to the Exchequer George Osbourne has touted the commitment to austerity and it seems that its finally paying off as the main driver in the lower deficit was a reduction of government department spending.
The combination of solid UK economic data and the continuation of the US pain resulted in strong week for the pound. From a low of 1.5894 it was able to record a 1.6% gain to reach highs of 1.6225 in the time period between October 15 and 22.
Get The News You Want
The Bank of England minutes tomorrow will add more optimism about the pace of the UK economic recovery, even if some housing bubble concerns are raised. Thursday’s speech by Governor Carney will prepare the market for the main UK indicator this week when on Friday the GDP figures for the third quarter are released.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.